IRR

“One of the things I think most early stage firms get wrong is they just focus on Moik. They don't focus on IRR.”

“If you go forward IRR at every liquidity opportunity is lower Then what you are basically promising your LPs or what you think your fund should have. I think you should sell. I think you have an obligation to LPs to at least sell.”

“And then just people that are obsessed with IRR, because in these funds, there are ways to manipulate it. You have to look at multiple of capital and how many years you're stuck and the average amount of capital deployed, and then use that as a litmus test ver…”

“And the portfolio isn't sized based on the highest IRRs. A lot of times the highest IRRs have the fattest tails to them.”

“If there's a world where firms are generating consistently 30, 40% IRRs, people are going to notice that, and some people are going to say, hey, I should do that too, and then the returns inevitably get bid down.”

“I remember realizing when you watch the late stage hedge fund guys come in that they fundamentally run their entire life on IRR. They have, you know, yearly high watermarks, compensation schemes, and therefore they're competing for a deal and they're not sayin…”

“I don't think the algorithm is maximize IRR. Logically subject, and I'm such a geek, subject to some caveats, the real algorithm is maximize multiple subject to a constraint on IRR.”

“So far, actually, interestingly, on IRR and multiple, we very easily beat it. All of us, the top five, you said, you know, the five firms or whatever, everybody beats it.”

“Private equity firms typically are optimizing for IRR, internal return. And they're less focused on like ultimately like a multiple on money, basically saying like they're not focused on the biggest possible version of the company that they can build.”

“And to do so, you need to have a very different view on returns and you need to have a very different view on short term earnings. Because what will end up happening is like, turns out engineers, Pretty expensive. Right. And it requires like significant invest…”

“You have to produce basically a one X DPI in whatever fund you're in that they've invested in to get them to invest in the next fund. It doesn't matter how well it's shaping up versus the vintage. It doesn't matter if it's top core, top top decile. It doesn't …”

“A lot of the great growth funds right now have a no zeros mandate. Like they won't invest in something if there's any risk that it goes to zero, and then they're underwriting against like a 20% IRR.”

“A lot of LPs of longstanding relationships going 3040 years back to the firms that are still on the short list of what are the best BFC firms in the world have gotten returns that are quite a bit south of The IRRs that reported in those manager records.”

“Normal rich people have no idea what MOIC is, let alone IRR or loss to lease, et cetera. If you want their money for your project, include a slide in your deck titled what we will do with your money in plain English.”

“Everyone is full of shit in venture on Twitter. Oh, I'm all my investments are so great. I'm such a genius. I own point. Oh, one percent of this unicorn. I made so much money, but the real IRRs, when you blend it all together, they're negative.”

“Angel investors often tend to like overestimate their performance because when you see people that are like great angel investors, they're very selective in their disclosure of what deals they've done right on their. LinkedIn or Twitter, they'll have like, oh,…”

“There's no par payout at the end. A lot of times you're getting back 40 cents, 50 cents on the dollar. Now, over the eight-year life of the CLO, you've got these very large distributions along the way. Hopefully it nets to a nice return for you, but you don't …”

“I don't manage for IRR. I manage for multiples. So we don't run a line of credit, for instance. That would be a much better way to eke out another point of IRR, but that's not how I want to run the business.”

“In lots of parts of the market, the data is easy to manipulate. Depending on how liquid, even not just private equity, but how do you mark a credit book is very important. Some people market mid-market, some people mark bid and ask. I think it's useful to star…”

“You can't eat IRR and you can't eat paper markups. You can only eat the distribution.”

“Top LPs last year reported, had 90% average IRR. So they got drunk on this too, and they fueled it, and they took this stuff seriously.”

“And what turned out to be the 2006 and 2007 CLOs, the vintage medians from those periods far outperformed the base case in the pitch books. Not because they had good loans. They probably had some bad loans, but they had the ability to keep reinvesting with loc…”

“We spent a lot of time looking at our IRR with hedge fund managers. We've been able to add a couple hundred basis points by taking money away when they're up and adding when they're down.”

“Do you have so much better data, or at least historically, but do you know what the average top tier university endowment adventure did last year? The IRR? ... 90%.”

“It means we have fewer exits in the next few years. It means the valuations at which these exits happen are lower which means that the IR we get are lower”

“It means we have fewer exits in the next few years. It means the valuations at which these X's happen are lower, which means that the IR we get are lower”

“AngelList did a study of all of their different mini funds on AngelList to see which ones were the most successful. And their ultimate conclusion was The more qualified deals, and of course we need to define what qualified means, you invest in, the higher your…”

“Across the Bessemer portfolio, companies that had a cash conversion score of one X at the time of financing actually yielded an internal rate of return of a 120%.”

“Whereas on the debt business, we have delivered something like net of fees for the last five almost five years 1718 quarters. We've delivered about 13, 13 and a half percent net of fees in our funds.”

“Whereas in early stage, you know, if you are underwriting to 12, 14%, you're gone because only two of 10 will work, right? So we have to go for the 25, 30% IRRs on the early stage equity side.”

“The reason why you buy private equity isn't for the total return, in my view, it's the relative return to your PME, because a private equity portfolio or private equity management, let me just give you an example. Let's say they generate a 12% IR. Well, if you…”

“I haven't covered the company that we exited recently. It was a good exit for us. Triple digit IRR. This was a company in the gaming side.”

“We place our loans at mid teens. We have a warrant component for all the synergies. We bring it into the ecosystem. That's traditionally anywhere from 15 to 20% of the debt amount, which is typically at the last round valuations or closer, if a company is rais…”

“We stand to at close to three X MOIC on the realized investments. And we clock approximately 25% in terms of IRR as well.”

“For relationships that can compound over a long time into something Really big, even if there's a lower nominal return to that, if you don't have that kind of reinvestment risk, you may want to choose that relationship over something that has more of a burst o…”

“They had an obligation to fund in certain point, but there was no big difference if money sits on their balance sheet, or not, not, not even balance sheet, or on our balance sheet, or it sits with them. In this case, they can optimize their, you know, IRR, whi…”

“Our first firm's over 40% IRR, you know, it's 50,”

“If the IRR is 12% or 14%, and it's that close, like, it's probably not a good deal. It's got to be, like, no-brainer stuff that is just like, oh, if it works. If it doesn't, it's a zero.”

“Because in this business, when you're trying to generate returns, both cash on cash, you know, return multiple, which we tend to focus on, but also IRR, which a lot of institutional LPs focus on, really does start to hone your senses towards particular timefra…”

“We're happy to waive the fee, but it'll have a impact on the interest rate. So the way we think about it is how much IRR or how much profits in general are we going to make on the loan? So if you want zero fees, I'm more than happy to waive it, but it'll be tr…”

“So, the IRR, I mean, it was definitely like above 20%.”